This paper presents the outcomes of a study on the learning and problem-solving skills of third-year undergraduate students in a laboratory course of Kinematics and Dynamics of Machines in Mechanical Engineering Department of Indian Institute of Technology, Bombay, India. The study required students to design experimental setups and implement modern sensing techniques using readily available equipment/tools and software. The experiments were based on sensing and analyzing signals using smartphone-based sensors. Students were asked to design and fabricate the apparatus using their own skills and easily accessible materials, guided by written instructions. The setup utilized a smartphone’s inbuilt accelerometer and gyroscope for sensing. This hands-on approach of setup development, sensing, and data analysis not only enhanced students’ understanding of sensing and data acquisition but also significantly improved their design and problem-solving skills, which are generally lacking in conventional laboratory machines. This approach also allowed students to explore and understand various systems using easily accessible materials and technology. Additionally, they were assigned to apply the skills and techniques they learned to systems of their choice, which was the basis of evaluation of their learning. The study resulted in enhanced understanding and problem-solving skills among the students, as confirmed by their design and analysis of various systems at the end of the semester.